Uganda will require fiscal terms that offer the right incentives to invest capital and take up front risks if it is to realize the vast amounts of capital needed to develop the country’s oil resources.
This is according to Tullow Oil Uganda managing director Jimmy Mugwera who says Uganda stands to benefit from revenues worth $50 billion in the coming years under an agreement that will see the government get 80 percent of net revenues.
The reserves in Uganda are estimated to be worth $100 billion and field development plans that will ultimately lead to the final investment plans are expected in the next 24 months with the company calling for timely approvals.
The company warns that there is need to manage people’s expectations with the expected revenues almost 3 times the current GDP of Uganda which stands at $17 billion.
“This creates an expectation that when oil starts to flow, money will rain from the sky. Being a nascent oil country, there is also the perception that oil will come tomorrow. We are working to build people’s knowledge and the understanding that it takes years to develop and produce oil and that defined work programmes need to take place at each stage of the process. Nevertheless, it is important that we now work swiftly and resolutely to reach the development stage,” he says in the recently released Tullow Country report.
The report also shows that the Uganda government benefited from $175 million in taxes ($142m in corporate tax, $33 in VAT) while the company paid out $47.5m to local suppliers and $44m in salaries.
The company CEO has also continued to exonerate itself from bribery and corruption claims raised in 2011 by an Ugandan legislator terming its projects in the country above board.
“Since the day I founded Tullow, there has always been a zero tolerance approach to corruption and we have never been accused of such behaviour before in 30 years of working in Africa. Our zero tolerance approach is made crystal clear to anyone who works for us or with us and is reinforced by our Code of Business Conduct, related policies and ongoing programme of training. Our good name is one of our most valuable assets and we will always vigorously defend it,” Tullow Oil Plc Chief Executive Officer Aidan Heavey said.
Tullow Oil has 3 interests in 3 licences in Uganda’s Lake Albert rift basin and is in partnerships with Total and CNOOC who equally hold one third interest each.